Aggregate Value Of Private Equity-Backed Trade Sale Exits Hits Record High In Q3 2015 by Preqin
230 trade sales valued at $96.7bn were recorded in Q3 2015 for portfolio companies backed by private equity buyout firms, the highest quarterly total value of such exits on record
There were 230 trade sale exits in Q3 2015, nearly matching the record 231 exits in Q4 2012. This total is expected to increase further as more information comes to light, surpassing the previous record and making the quarter the busiest ever for private equity-backed trade sale activity. Trade sales have been the key driver of the private equity-backed exit market in Q3 2015, as the number of IPOs, sales to GP, and restructurings all fell.
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Nonetheless, private equity-backed exit market as a whole contracted slightly in the third quarter of 2015, as 394 exits were completed, worth an aggregate $116bn. This is a decrease in both number and value from the previous quarter, when 413 exits occurred, worth a total of $122bn. However, it did mark the third consecutive quarter in which overall exit value exceeded $100bn, and so far this year $340bn-worth of exits have already occurred.
Private Equity-Backed Trade Sale Exits – Other Key Buyout Deal Market Facts:
- Deal Flow Steady: The number of private equity buyout fund-backed deals in Q3 was 874, slightly above the 834 in Q2. However, aggregate deal value fell 17%, from $102bn in the second quarter of the year to $85bn in the third.
- Regional Change: While aggregate deal value in North America fell from $51.4bn in Q2 to $44.3bn in Q3, Asia overtook Europe to be the second biggest region in this regard. 270 deals were completed in Europe, worth a total of $17.5bn, a 55% decrease from Q2. At the same time, 59 deals were completed in Asia, worth an aggregate $20.8bn, an increase driven by several large deals in the region.
- Buyout Popularity: More LBO deals than add-ons were completed in the third quarter, accounting for 39% and 37% of the number of deals respectively, and reversing the trend of Q2. However, while add-ons represented just 11% of the total value of deals, LBOs were 66%, an increase of 27 percentage points from the previous quarter.
- Large-Cap Share: Despite just 9% of all deals being classified as large cap ($1bn or more in value), these transactions accounted for 64% of the total deal value globally in Q3 2015. Small-cap deals, those worth less than $100mn, constituted 51% of the deal flow, and 4% of the aggregate deal value in the quarter.
- Dry Powder Increases: Unspent capital available to buyout fund managers has continued to climb through the quarter, rising from $467bn at the end of June to $483bn at the end of September 2015.
- Largest Deals: The biggest transaction of the quarter was the acquisition of Veritas, the former data storage unit of Symantec, for $8bn by the Carlyle Group and GIC. Of the top 10 largest deals of the quarter, 6 were in North America, 3 in Asia, and only 1 in Europe.
- Biggest Exits: The sale of SunGard Data Systems Inc. to FIS Global for $9.1bn was the biggest exit of the quarter. The company was acquired by a consortium of investors including Bain and KKR for $11.4bn in March 2005.
“The private equity-backed deals market has presented a mixed picture through the third quarter; record growth in Asia is balanced by stalling North American activity and tumbling European figures. Although dry powder levels have continued to climb, issues of valuation and competition that have preoccupied both managers and investors don’t seem to have materialized. While deal numbers have increased slightly, aggregate deal value has fallen below the $100bn mark reached in the first two quarters of the year.
The number and aggregate value of exits made by portfolio companies backed by private equity buyout firms have also declined slightly from Q2. Exit numbers have been declining after record highs in 2014, and while aggregate value of exits had been increasing through H1 2015, it has not matched those levels in Q3.”
Christopher Elvin – Head of Private Equity Products, Preqin